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Will Obama's healthcare reform plan cut costs?

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•At first, America's overall healthcare spending is likely to head higher than it otherwise would. The reason is that an estimated 30 million or more Americans will be newly insured.

The core of Obama's initiative is a mandate for individuals to buy insurance, coupled with subsidies to help pay for it and penalties for people who don't buy it.

•Obama intends to cover those new costs, without adding to federal deficits, mainly by squeezing efficiencies out of Medicare for seniors.

The reality is, these planned savings are uncertain. If seniors observed a decline in their quality of care, for example, a future Congress might be tempted to open the spending spigot wider.

•Government's role in the healthcare system would go up. That could be good or bad for cost control, depending on your view. Proponents say more regulation would provide needed leverage, while opponents would prefer to rely more on enhancing marketplace competition.

•Even if the reforms work well, they're a partial fix – a start down the road to cost containment. With or without reforms, forecasters see the nation's healthcare spending rising sharply over the next decade. The question is not so much whether healthcare costs will rise, but how much.

"The test [for Obama's plan] will be whether the rate of growth of healthcare spending relative to total income is higher or lower than it has been in the past," says Henry Aaron, a health policy expert at the Brookings Institution, a Washington think tank that tends to be centrist or left-leaning.

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